two empirical cultures?

Thanks to Sean for inviting me to contribute to orgtheory, a blog I read avidly. I am indeed an applied economist, but one who is in the pretty unusual (and I would argue, enviable) position to count many org theorists and econ sociologists as colleagues and coauthors (or both). Though I began my career interested in organizational economics in general, and in firm boundaries issues in particular, these days my research sits squarely at the intersection of several subfields of economics – technical change, org econ, and health.

I thought I might try to start a discussion between what I see as the real dividing line between applied economics and what I will call “applied sociology” – that part of the field that is interested in positing and testing empirically hypotheses regarding different aspects of social organization, using the tools of statistics (this would encompass most, but maybe not all of org theory scholarship).

Sociologists often emphasize differences in assumptions, such as rationality, methodological individualism, or exogenous preferences. Surely, this would have been right twenty or maybe even ten years ago. Since then, two things have happened.

First, economists have become much less wedded to any single of model of human behavior. You’ll see much less articles in journals motivated by a puzzling anecdote (e.g. why do prices end in .99?), and building out of it an elegant game theoretical model in which the puzzle arises in equilibrium as a second best solution (see this and this for echoes of this debate). Models are much more likely to be constructed with a specific empirical question in mind, and are only considered useful if the data permits to distinguish between the mechanism the model posits and alternatives (see here and here for two relatively recent examples).

The second change is that applied work in economics tends to be less tied to formal models than in the past. The poster child for this trend is of course Steve Levitt of freakonomics fame, but David Card, Josh Angrist, and Esther Duflo (among many others) are probably the intellectual leaders of what I will call, for lack of a better word, the “identification movement.” This has not been uncontroversial (and see here for a rebutttal).

In my next posts, I’ll try to explain why I think this movement has been altogether a good, and maybe even a great thing for the social sciences. I’ll try to be honest about the costs as well. But I am especially eager to find out why this movement has had, as far as I can tell, little influence on empirical practice in sociology, and more specifically, org theory.

Hi Pierre. Nice to see you slipping into the MIT chair in the orgtheory court. In addressing why the identification movement has not had much influence in soc, I hope you bear in mind that experimental work–including lab work, field experiments and natural experiments, and IV techniques– have long had significant influence in sociology. Lab work has generally not been influential in org soc but I can think of many prominent exceptions, perhaps the most important of which is Zucker’s 1977 paper “The Role of Institutionalization in Cultural Persistence.” Field experiments such as audit studies have also been around for a long time (an economist colleague of ours once lost a bet with a sociologist colleague when it was demonstrated that such experiments were not invented by Bertrand and Mullainathan) and seem to have been increasing in popularity and influence (for a review, see here: http://www.princeton.edu/~pager/annals_pager.pdf). And I can certainly think of work that has tried to exploit natural experiments, such as our friend and colleague Roberto Fernandez’s study of a plant relocation as a way of identifying spatial mismatch. Finally, if you search for “instrumental variable” in just the top 3 soc journals, you find 91 papers. All this does not mean that sociologists cannot learn a lot from the identification movement, so I’m certainly curious what you will say.

It’s interesting that you say that economists aren’t wed to models. The typical response most economists have to papers in other fields is that they have no theory since there is no equation. Levitt and a few others are exceptions, but the overwhelming majority of papers in econ have a neo-classical model or a variant.

Within the field of law & econ, I’d have to agree with Fabio. The dominant models are still neoclassical. Scary, actually, considering how few of the experts still buy hook, line, & sinker into it. See, for example, the interviews of Samuelson, Schelling, and Arrow by Conor Clarke:

[…] approaches are not isolated one from another. They are not mutually exclusive. This gets to the question of the empirical cultures of economics and sociology. My provocative retort would be that […]